Capital market regulator Sebi Fortis Healthcare Limited (FHL) has imposed fines totaling Rs 38.75 crore on 32 companies, including Fortis Healthcare Holdings, in a misrepresentation case involving the removal of funds and concealment of fraud.
The matter goes back to 2018 when a media report was published alleging that the promoters of the listed FHL had taken huge funds from the listed companies. It also noted that Deloitte Haskins & Sells LLP, FHL’s statutory auditor, refused to sign the company’s second-quarter results until the funds were accounted for.
Subsequently, the regulator launched an investigation into possible violations of the provisions of the PFUTP (Fraud and Prohibition of Unfair Trade Practices).
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It conducted an investigation into the issuance of inter-corporate deposits (ICDs) to three borrowers – Best Healthcare Pvt Ltd, Fern Healthcare Pvt Ltd and Modland Wars Pvt Ltd – between 2011-2012 and 2017-2018. .
In its investigation, SEBI found that a systematic scheme of fraud was devised by the previous promoters of FHL to funnel the resources of a listed company behind the investment front through ICDs or various intermediaries for the benefit of RHC Holdings, an entity that indirectly Was owned and directly controlled by previous promoters.
As per the order dated May 18, a total of Rs 397 crore was transferred from FHL to RHC Holding through a wholly owned subsidiary of FHL – Fortis Hospitals Ltd (FHsL). The funds were raised through a network of entities, the first of which consisted of short-term loans or ICDs from FHsL to any of the three entities – Best, Fern or Modland.
Between December 2012 and March 2016, Fortis Hospitals provided numerous short-term loans, or ICDs, to Best, Fern and Modland, which have been transferred to RHC Holdings through various entity complex levels, the regulator said.
From the first quarter of FY 2016-17 to the first quarter of FY 2017-18, between April-May 2016, ICD or loans to Best, Fern and Modland, totaling Rs 473 crore, were shown to be repaid at the end of each quarter. And new loans are being shown as paid on the first day of the next quarter. However, it has been said that in reality no loan is being repaid.
“Huge amounts of money have been misappropriated from listed companies, namely, FHL (approximately Rs. 397.12 crore), serious misrepresentations that occur in FHL’s financial statements every year, elaborate schemes of fraud that have previously taken place for profit. FHL’s promoter, at the expense of a listed company, made the immediate lawsuit a matter of grave concern for the integrity of the securities market and was not to be underestimated, “SEBI said in its 179-page order.
False depictions of FHL’s financial position on a year-over-year basis were likely to persuade shareholders to continue their participation in FHL, when investors knew the parties involved and the final use of ICD. , They will probably exit their holding in the company, Watchdog said.
Accordingly, SEBI has fined Best, Fern and Modland Rs 5 crore each.
In addition, it has invested in Fortis Healthcare Holdings, Fortis Global Healthcare, Escorts Heart Institute and Research Center, RHC Finance, Shimla Healthcare, ANR Securities, Oscar Investments, REGAARME in the league, (Formerly Expert Creations), Best Cure (new name Devera Developers), Rexin Finance, Best Medicine (new name – Best Health Management), Artifice Properties, Ranchem, Adon Realty, Eddie Advertising, Rochester Marketing, Torres, Properties, Good luck Buildcon and Low Infra and Wellness.
Regulators Preetinder Singh Joshi, Anurag Kalra, Jasbir Grewal, Tejinder Singh Shergill, Pradeep Raniga, Brian William Tempest and Harpal Singh were also fined Rs 25 lakh each.
Last month, regulator Fortis imposed a total of Rs 24 crore in fines on nine companies, including businessmen Malvinder Mohan Singh and Shivinder Mohan Singh, for violating health care.